I am hoping that you are all a little more chilled reading this than you probably were when I wrote it, literally the day before the end of the main part of the stamp duty holiday.

How was it for you? Did most of your clients complete OK and are you now lying horizontal, breathing slowly, sipping neat gin through a straw with only slight slivers of sweat slowly slipping down your brow at the semblance of a memory of the stress you have been through?

Boy, am I glad that is over with! We really don’t need one of those again, certainly not with a cliff edge. In fact, isn’t it time to do away with bloomin’ stamp duty altogether?

Some people will come out of this stronger, having passed the test well; others, maybe not so much. What is important is that we learn from the experience, review what went wrong and what went right, tweak our processes and gather ourselves up for the rest of the year, which may prove to be a trickier time.

Coping with tough times

I have always said it is easy to be a broker in the good times, when leads are flooding in and everyone plus the cat’s mother seems desperate to buy a home and offers on everything. What makes a broker, and a lender for that matter, is how they react when business slows, when they have to work that little bit harder.

We may see a slight lull — as buyers and sellers assess the landscape, and stock takes time to rebuild —  before we go again. I don’t think this will be too long, however; a brief recess while we enjoy a bit of social life, basking in the glory of a footballing victory over the Germans and, who knows, even a run to the final, maybe a holiday or time with the family/partner/friends/senior aide or whatever floats your boat.

Isn’t it time to do away with bloomin’ stamp duty altogether?

The demand for properties is not and never was driven solely by the stamp duty holiday, so I suspect we will have a busy end to the year. Record-low borrowing rates and the radical shift to homeworking have been as much a driver of transaction levels as tax savings. The knock-on effect of a fundamental lack of stock is pent-up demand, especially among first-time buyers and landlords, and this will support activity levels over the summer.

One interesting discussion now is around inflation. Although we have not really seen the cost of funds rise too much, there is real potential for inflation to increase dramatically as the economy continues to bounce back into life again.

There are some who are starting to be deeply critical of the decision by the Bank of England’s Monetary Policy Committee to continue with its quantitative easing package. They believe that not at least showing the markets it is concerned about rising inflation, expected now to top 3% by the end of the year, risks it being behind the curve when it comes to act, or that it shows a little less independence than the committee purports to have.

Others point to the fact that this rise is temporary, and inflation will drop again as soon as we work through our post-pandemic issues. This is set to be a fascinating debate in the months ahead.

The usual cursory glance at the money markets shows that three-month Libor is still stable at 0.08%, with cousin three-month Sonia also stable at 0.05%.  Swap rates remain exceptionally low but have risen very slightly, apart from over 10 years.

Since the last column:

2-year money is up 0.06% at 0.38%

3-year money is up 0.06% at 0.52%

5-year money is up 0.03% at 0.73%

10-year money is down 0.04% at 1.00%

In the mortgage market the threat of a lull has proved a bit of a catalyst for lenders to keep their rates low or cut even lower. There are now no fewer than eight lenders with products at 1% or less, with TSB reducing its two-year fix to a mere 0.94%.

High loan-to-value rates are also reducing, albeit at a slower pace, although I suspect it will start to speed up over the coming months. Santander and Virgin Money are introducing £1,000 cashbacks on higher-LTV products as well as reducing rates, which always goes down well.

Metro Bank continues its recent good run of form by introducing new two- and three-year products at 95% LTV and reducing its rate-switch rates.

Criteria tweaks

There have also been more tweaks to lenders’ criteria, which are interesting to see. The wonderful HSBC (oh, how times change!) has updated its salary threshold criteria for applications with an LTV less than 85%, from £50,000 to £30,000, with more customers now eligible for a mortgage at 4.75 times income.

On the buy-to-let side, Barclays has introduced a cap to subject [OK?] property loan size at 10 times the client’s gross personal income (excludes existing rental income). Also, some applications may be declined if the pay-rate interest cover ratio is less than 100%.

Coming out of the pandemic, the last thing we need is extra rules and cost

Finally, I may not be the first, or last, to mention it but looking at the new Consumer Duty regulation on which the Financial Conduct Authority is asking for feedback seems to be something additional our industry just does not need. We already work hard to ensure our clients get clear advice and the best outcomes that are suitable for their circumstances, and we treat all customers fairly. Do we really need yet another layer of an already well-dressed and well-protected onion?

We have a robust, well-rounded and sensible set of regulations that the overwhelming majority in the mortgage market abide by already. Coming out of the pandemic and into a different future, the last thing we all need is more rules and extra cost, which may end up getting passed on to the consumer by necessity.

I am all for regulation. In fact I am a big fan of it. But it mustn’t end up punishing the good while the bad carry on regardless, or hurting those it is intended to protect.

Andrew Montlake is managing director of Coreco